Solar Water Heater Programme Roll Out Strategy 18 February 2015

1. Solar Water Heater Programme Roll Out Strategy 18 February 2015

2. Outline Background and Context National Solar Water Heater Programme Objectives Progress to Date Previous Delivery Model Challenges And Remedies National Solar Water Heater Programme Implementation Approach Available Opportunities and Benefits Conclusion

3. Background & Context • The national solar water heater programme (NSWHP) is implemented within the broader scope of South Africa’s energy plans and strategies. • The programme gained prominence after: • Introduction of the rebate incentive scheme; • Ministerial pronouncement; • Presidential Launch; • Being identified as one of the government’s multi-benefit interventions (in various government planning documents); • Pronouncement of fiscal allocation; • SWH Sector Designation; etc. • Currently implemented as a sub-component of one of the country’s Strategic Integrated Projects. • Mass rollout is guided by the country’s localisation, economic transformation and job creation imperatives.

4. 23 June 2009 DoE Budget Vote Sequence of Events 05 November 2009 NSWH Conference 28 April 2010 NSWH Official launch by the President of RSA

5. 17 November 2011 Green Economy Accord signing Sequence of Events … 22 February 2012 Budget Speech : NSWH Appropriation R4.7bn 31 December 2012 SWH Rebate programme ended Mass Rollout

6. 29 January 2013 The dti’s media release on the SWH Designation study Sequence of Events … 19 July 2013 and June 2014 respectively NT signs off and release the SWH Instruction Note 342, 001 SWH installations recorded at the time of the dti’s media release. The SWH designation was informed by a Designation Study that was conducted in 2012 and over 400, 046 at the time of 2nd Instruction note

7. National Solar Water Heater Programme Objectives

8. Previous SWH Delivery Model Challenges and Remedies

9. Previous SWH Delivery Model Challenges and Remedies

10. NSWH Cabinet Submission • In light of all the challenges, the Department started a process of revising Contracting Model to address the identified challenges from which a submission is awaiting Cabinet consideration • Future implementation is based on proposed corrective measures to address all the identified challenges. • Pursuant Cabinet approval, a detailed Contracting Model will be presented to the Committee.

11. SWH Implementation Approach 1. Social Upliftment 2. Demand Reduction Component 2.2 1 2.1 Installations of LP SWH Systems Houses without Electric Geysers Installations of LP SWH systems in houses with electric geysers Installations of HP systems in houses with electric geysers - Provision of free hot water to low income households- Cushioning the poor from rising electricity tariffs • Reduce electricity consumption, and response to • climate change • Explore funding options for maintenance and repair of the current footprint

12. Overview of the NSWHP - Suppliers • Supply designation-compliant products • Provide product-specific training to participating installation companies • Provide and implements policy framework, • Enlist designation-complaint manufacturers Manufacturers DoE Supply & Implementation Agreements Service Level Agreement SABS • Provide independent local content verification services • Provide product quality testing

13. Overview of the NSWH Programme - Installations • Provide policy framework & funding • Enlist beneficiary municipalities, manufacturers & installers • Monitor, Report and Verify SWH system performance Dept. of Labour /UIF: Partnering on Training DoE Draft MoA • Should meet requirements for installations • Preferably within the project site for maintenance purpose • Owned by designated groups, SMMEs, etc. Service Level Agreement Registered Installers Municipalities • Status • Recorded SWH installations = 417,700 by 30 Sep’14 • Local content verification for SWH suppliers completed • More partnerships secured for training of local plumbers & installers • Designate an installation area • Provide requisite support to local installation companies • Support social facilitation & community mobilisation • Provide warehousing facilities where feasible • Serve as linking between the DoE & service providers

14. Available Opportunities and Benefits After-Sales Services Installation Services Training & Skills Development • Training and certification of about. • 5,000 installers; and • 200 local small businesses (only those owned by designated groups) • Business management and other soft skills development • Undergo a train-the-trainer programme • Conduct feasibility investigations • Installation of SWH systems • Project management services • Logistical & warehousing services • Maintenance of installed SWHs • Monitoring, reporting and verification of energy savings • Supply and delivery of consumables and other maintenance components

15. Available Benefits and Opportunities … INSTALLATION SERVICE COMPANY ARCHITECTURE

16. Progress to Date on the Status of SWH Localisation • In the beginning, the NSWH programme was dominated by imported units which ultimately, and to some extent, did not create flexibility for the programme to achieve all the much needed and committed competing national objectives. • Consequently, the low-pressure SWH rebate programme was discontinued as from December 2012 and is being replaced by the New Contracting Model. The proposed SWH New Contracting Model is aimed at promoting local manufacturing and development of Small Medium Micro Enterprises (SMMEs) largely as installers within the SWH value chain. • The localisation objective was intensified and affirmed by the designation of solar water heating as an industry. The designation seeks to define and determine the level of local content on solar geysers and as such the tanks and collectors as of August 2013 were indeed designated as per the SWH Instruction Note released by National Treasury. • In order to allow local manufacturers ample time to ramp up production capacity necessary to meet local demand, about R700m from the combined allocations for the 2013/14 and 2014/15 financial years has been shifted to the outer year 2015/16 financial year.

17. Indicative NSWHP Allocations

18. New Growth Path: Accord 4: Green Economy Accord Commitment on SWH • The Green Economy Accord signed by Government and its Social Partners outlines the following on Commitment One: Rollout of Solar Water Heaters • Accordingly, parties committed the following: • Increase the roll out of one million units • Improve localisation of the components • Secure support from the insurance industry for replaced units • Secure guarantees in installed units • Promote the marketing of solar water heating systems • Promote uniform technical and performance standards for SWH

19. Progress: Local Content Verification

20. Conclusion • Portfolio Committee on Small Business Development to note: • latest progress on SWH localisation and installation. • re-engineered SWH delivery model that seeks to remedy past challenges. • opportunities (business, training, job creation, etc.) presented by the national SWH rollout. • deliberate focus on establishing an environment capable of supporting the development and viability of small businesses. • Poor installation workmanship has proven to be one of the crucial determinants of a nationwide SWH programme. • Therefore the DoE views capable small businesses as the “backbone” of a successful NSWHP and currently in engagement with the Department of Small Business Development. • A well structured and supported after-sales service is a pre-condition for sustainability of small businesses beyond the life of SWH projects. • The DoE commits to working hand-in-glove with all relevant stakeholders.

21. Mokgadi Modise Department of Energy: Policy Planning & Clean Energy Branch Tel: +27 (0) 12 406 7643 Cell: +27 (0) 82 449 7550 Email: mokgadi.modise@energy.gov.za Website: www.energy.gov.za